Manufacturer must supply the demand of his clients

Reference no: EM13202804

A manufacturer must supply the demand of his clients for the next season. Production for next season must be completed by the end of this season. The cost of manufacturing a single unit is $1, and any unused supply will be spoiled. Outstanding demand can be met by purchasing it from a competitor at $2 a unit. The demand for next season is uncertain, and will not be known before manufacturing ends. There are two possible

scenarios:
• high demand, equal to 70,000 units, with probability 0.8
• low demand, equal to 30,000 units, with probability 0.2.
Formulate a stochastic LP to supply the clients demand at minimum cost in the long run.

Reference no: EM13202804

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